Industry Consolidation: Not as Simple as it Looks
Cadmus was bought by Cenveo. Cenveo chased Banta, and then R.R. Donnelley outbid them. Donnelley then bought Von Hoffman. Cenveo is a product of mergers. Donnelley is becoming one as well. There’s more to come. The fact that mergers and acquisitions exist in the printing business should not be a surprise: they have been going on for decades. The 1980s had their “greying of the industry” wave, as owners sold because their grown children had careers of their own, many deciding that printing was not for them. The 1990s had a growing stock market and Wall Street analysts who saw commercial printing as a growing business (remember how the Internet was stimulating print volume and that it would never end?), filled with inefficiencies, easy money, and a great opportunity for fees for managing whatever deals they could, even if they didn’t make sense. Investment bankers don’t make money on the stocks...they make on the fees for handling the deal, especially when the companies are public. When the deal is done, they’re usually out of the picture.
If prior consolidations were primarily waves of generational or monetary exuberance, today’s are generally defensive. There is a desire for synergystic retrenchment, as businesses combine, eliminate redundancies, cherry-pick equipment and personnel. These mergers do not contain an ingrained desire to create new markets or new opportunities or to ride new waves of demographic, economic, or technological change. They are a search for ways to adapt familiar tools to a confusing marketplace.
Big name consolidations are how the other half, or more accurately, the other five percent, live. The rest of the industry consolidates by the forces of the marketplace. Printing businesses go bankrupt; or, they close one business, and join another printer in a new venture; or, they close up shop and become print brokers. Trade typographers closed and became desktop publishing businesses or service bureaus or graphic design studios. This small business turmoil does not get much attention, but it is of greater volume and frequency than most realize. Department of Commerce data consistently show in the range of 3,000 print businesses closing and 2,000 print businesses opening every year for more than a decade. These are not “newbies” to the printing industry, these are signs of an industry that is always restructuring itself, under the radar. The bulk of these businesses are long-time industry workers and owners closing one business entity and starting another, cleaning up their financial and marketing sins, believing that a fresh start with a new partner or in a new place or with a new name, and better yet, a new strategy, will keep them in the printing game where all their experience resides.